HMO
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New HMO rules for landlords set to take effect from October 2018

The government will implement new regulations for houses in multiple occupation (HMOs) from 1 October 2018 after a mandatory HMO licensing extension was confirmed in Parliament last week, which spells big changes for some landlords.

It has been more than two years since the issue of mandatory licensing for HMO properties was discussed by the government, and a date has now been set for the new rules to come into effect. It will mean that mandatory conditions and licences will apply to all HMOs that fall under the stated criteria, and the landlords who own them, further tightening up the market and minimising the number of unfit properties and rogue landlords in operation.

What are the licensing changes?

The new mandatory licensing policy from October 2018 will apply to HMOs that are occupied by five or more people, comprising individuals living in two or more separate households – frequently but not exclusive to groups of cohabiting adults – regardless of the number of storeys. The property is also classed as an HMO if it is not made up of self-contained flats, the people who live there treat it as their main residence, and two or more of the occupying households share one or more of the basic amenities. More detailed information can be found here.

Owners of properties that fall under the above criteria will need to obtain licences when the new regulations take effect, which is expected to bring an additional 177,000 HMOs under the mandatory licensing scheme in England. Where selective or additional schemes are already in place for landlords, which accounts for about 20,000 HMOs, the new scheme will replace existing licences.

Current licensing rules already apply to large HMOs, where five or more people rent rooms in the property from more than one household, if the building is more than three storeys high.

What if landlords don’t comply?

The Ministry of Housing, Communities and Local Government has confirmed that landlords are legally required to submit their applications for mandatory HMO licensing by the deadline of 1 October 2018, with no allowance for a grace period after this date. The government is expected to publish guidance in the coming months on the issue to make local authorities aware of the obligation, but landlords who fail to apply for the correct licence will be in breach of the law.

Will there be any other changes?

Implementing a minimum room size rule has been part of the talks, and more specific details on this are still to be announced. The minimum sizes will apply to rooms that are slept in, and local authorities will be required to enforce this by specifying appropriate rooms in HMOs, and the number of people allowed to occupy them. If the conditions are breached, the local authority will issue a warning to the landlord to remedy the situation, after which point legal action can be taken.

Another condition of the licences will relate to refuse disposal and storage facilities, with minimum numbers of bins and storage facilities for waste expected to be set out by the government.

Source: Buy Association
mandatory HMO licensing
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Extension of mandatory HMO licensing set for October 2018

The Government has confirmed that the extension of mandatory HMO licensing is due to come into force form 1st October 2018, subject to Parliamentary approval.

The regulations bring purpose built flats where there are up to two flats in the block, into the scope of mandatory licensing. They also remove the three storey rule -at present mandatory licensing applies to HMOs of at least three storeys and five occupants comprising of two or more family units.

How will it affect me?

Research from RLA PEARL has found that 16% of landlords rent to people in HMOs.  It is estimated that an additional 177,000 HMOs will become subject to mandatory licensing in England as a result of this extension.

Properties will be subject to mandatory licensing if they meet the following criteria:

  • It is occupied by five or more persons;
  • is occupied by persons living in two or more separate households; and
  • meets—
    • the standard test under section 254(2) of the Act;
    • the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
    • the converted building test under section 254(4) of the Act.

The Order, which can be read here applies to HMOs in England, but does not apply to converted blocks of flats, to which section 257 of the Act applies. These are buildings that have been converted into and consist of self-contained flats where the building work undertaken in connection with the conversion did not comply with the appropriate building standards and still does not comply with them, and less than two-thirds of the self-contained flats are owner-occupied.

Six month grace period

There would be a grace period of six months to give landlords time to comply and local authorities time to process licences.

The RLA believes many of the changes are unnecessary and says they will put a huge strain on local authorities. The Association made its points in its formal response to the Government consultation.

Source: RLA

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New HMO Regulations for Mandatory Licensing – Effective 1st Oct 2018

Statutory Instruments
2018 No. 221

Housing, England
The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018

Made

20th February 2018

Laid before Parliament

23rd February 2018

Coming into force

1st October 2018

The Secretary of State makes the following Order in exercise of the powers conferred by sections 55(3) and 250(2)(a) and (b) of the Housing Act 2004(1).
Citation and Commencement

1.—(1) This Order may be cited as the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018.

(2) This Order comes into force on 1st October 2018.
Application

2. This Order applies in relation to an HMO in England(2).
Interpretation

3. In this Order “the Act” means the Housing Act 2004.
Description of HMOs prescribed by the Secretary of State

4. An HMO is of a prescribed description for the purpose of section 55(2)(a) of the Act if it—

(a)is occupied by five or more persons;

(b)is occupied by persons living in two or more separate households; and

(c)meets—

(i)the standard test under section 254(2) of the Act;

(ii)the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or

(iii)the converted building test under section 254(4) of the Act.
Transitional Provision

5.—(1) A licence issued under Part 3 of the Act has effect as if issued under Part 2 of the Act in respect of an HMO that—

(a)is licensed under Part 3 prior to 1st October 2018, and

(b)is required to be licensed under Part 2 from that date.
Revocation

6. The Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006(3) is revoked.
Review

7.—(1) The Secretary of State must from time to time—

(a)carry out a review of the regulatory provision contained in this Order, and

(b)publish a report setting out the conclusions of the review.

(2) The first report must be published before 6th April 2023.

(3) Subsequent reports must be published at intervals not exceeding five years.

(4) Section 30(4) of the Small Business, Enterprise and Employment Act 2015 requires that a report published under this article must, in particular—

(a)set out the objectives intended to be achieved by the regulatory provision referred to in paragraph 1(a),

(b)assess the extent to which those objectives are achieved,

(c)assess whether those objectives remain appropriate, and

(d)if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision.

(5) In this article, “regulatory provision” has the same meaning as in sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015(4).

Signed by authority of the Secretary of State for Housing, Communities and Local Government

Heather Wheeler

Parliamentary Under Secretary of State

Ministry of Housing, Communities and Local Government

20th February 2018

EXPLANATORY NOTE

(This note is not part of the Order)

This Order prescribes a description of a house in multiple occupation (“HMO”) to which Part 2 of the Housing Act 2004 (“the Act”) applies. Under section 61(1) of the Act every HMO to which Part 2 of the Act applies must be licensed unless it is subject to either a temporary exemption notice under section 62 of the Act or an interim or final management order under Chapter 1 of Part 4 of the Act.

The Order applies to HMOs in England but does not apply to converted blocks of flats, to which section 257 of the Act applies. These are buildings that have been converted into and consist of self-contained flats where the building work undertaken in connection with the conversion did not comply with the appropriate building standards and still does not comply with them, and less than two-thirds of the self-contained flats are owner-occupied.

Article 1 makes a commencement provision.

Article 4 prescribes a description of HMOs for the purpose of section 55(2)(a) of the Act. The standard test relates to HMOs which comprise of one or more units of living accommodation which do not consist of a self-contained flat or flats. The self-contained flat test relates to HMOs which comprise of a self-contained, purpose-built flat situated in a block comprising of no more than two self- contained flats (whether or not the block also contains non-residential premises). The converted building test relates to HMOs which are converted buildings.

Article 5 makes a transitional provision.

Article 6 revokes The Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006 which this Order replaces.

Article 7 makes provision for the review of these Regulations at the end of the period of 5 years beginning with the date on which they come into force.

An impact assessment has been prepared in relation to this Order. The assessment will be placed in the Library of each House of Parliament and made available on www.gov.uk. Copies may be obtained from the Ministry of Housing, Communities and Local Government, 2 Marsham Street, London, SW1P 4DF.
(1)

2004 c.34. For the definition of appropriate national authority see section 261(1) of the Act.
(2)

For the meaning of HMO see sections 77 and 254 to 259 of the Act.
(3)

S.I 2006/371
(4)

2015 c. 26. See section 32.

 

Source: Legislation.gov.uk

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Overturned: council’s ban on hotel being converted into HMO

A COUNCIL ban on a hotel being converted into an HMO has been overturned.

Last year Bournemouth council turned down a bid to convert Earlham Lodge, at 91 Alumhurst Road, Bournemouth, into an HMO (house in multiple occupation), claiming it could damage Alum Chine’s reputation as a tourist destination.

However the applicant has now successfully appealed the decision, and the council will have to pay the costs.

Planning inspector Andy Harwood’s report states: “I have no evidence that the balance of the community will be harmed by the HMO.

“In relation to the main issue, the HMO has an acceptable impact upon the character of the surrounding area and its tourism function.”

He was critical of the council’s submission describing the tourism offer in the Alum Chine area.

The borough said according to the most recent figures, 22 per cent of visitors to Alum Chine beach during the summer of 2015 were staying overnight in Bournemouth, 50 per cent in hotels and 29 per cent in self-catering accommodation.

However the inspector said there was no evidence these people were staying in Alum Chine.

“It is not clear how the holiday accommodation is distributed or to what degree those properties are separated by residential accommodation,” he said.

“It is possible that some of these properties could involve use of rooms within dwellings rather than being solely holiday accommodation.

“The evidence is not precise or detailed.

“It is not presented in a form that helps me understand the geographical distribution of the holiday accommodation.

“From what I saw at my site visit, the largely suburban residential character of the area around the site does not appear to include a noticeably high concentration of properties that are clearly in use for holiday accommodation.”

Bournemouth council has already approved, in 2016, plans to convert the building to holiday flats, and recently agreed to drop a condition so the flats can also be used for accommodation.

The HMO bid last year attracted five letters of objection from nearby residents, chiefly expressing their concerns about potential noise, the loss of the tourist facility and the setting of a precedent for HMOs in the area.

Source: Bournemouth Echo

Additional Licensing
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Additional Licensing proposal in Bristol

The council proposes to introduce an Additional Licensing scheme for houses in multiple occupation across Bristol City.  Specifically 12 wards that make up central Bristol – Ashley, Bishopston & Ashley Down, Central, Clifton, Clifton Down, Cotham, Easton, Hotwells & Harbourside, Lawrence Hill, Redland, Southville and Windmill Hill – with the aim to improve poor management and poor housing conditions.

The Proposed Additional will capture most HMO’s that are not defined as HMO’s under the expected Mandatory Licensing regulations expected in April.

It would apply to all private rented houses or flats in this area that are let to three or more people who aren’t related and who share some facilities, like kitchens or bathrooms.

Landlords would need to apply for a licence and meet licensing conditions.

The basic proposed licence fee under this scheme without any discounts, would be £1,660, valid for up to five years. With discounts (early application/proof of in date & satisfactory Gas, Electrical & EPC Certificates and membership of an approved West of England Rent with Confidence scheme) the licence fee would be reduced to £885. For renewals this would be £785.

Further information about this proposal can be accessed by clicking here.

“Rob Crawford, Chairman for the Association of Local Landlords (Wessex) encourages all landlords that may be affected to read the proposal in detail before responding to the consultation survey.  The consultation closes on 13th May 2018.

The proposal was not unexpected after Councilor Paul Smith’s (BCC’s Cabinet Minister for Housing) outburst at a recent landlord meeting, where he revealed plans to introduce City Wide licensing were due to “Labour Policy!

Together with recent changes in tax legislation, higher tax threshold landlords with large portfolios now face bankruptcy.  Irrespective as to whether the landlord is compliant or rogue. Additional licensing does not discriminate sufficiently between the two!

The Council has not demonstrated how a basic Additional Licensing fee of £1,660 can possibly be justified.  If the Council maintains that this level of fee reflects its costs of administering the scheme, then it must be so inefficient that it must be challenged.  While the Council may have the legal power to introduce new measures, it is also under a duty to do so in the most cost-effective manner possible.  ALL Wessex is aware of at least one significantly lower cost alternative scheme.

Furthermore, the Council needs to be reminded that there is a legal obligation on Councils to only spend the funds raised from Additional Licensing on the scheme.  It is simply illegal to spend this money on other Council services.

The Council is proposing that a discount of £775 can apply, resulting in a net fee of £885.  However, the Council has not justified why its costs would be so much more if landlords cannot comply immediately with these requirements.  Even at a proposed discounted fee level of £885, ALL Wessex has some difficulty in understanding how the Council’s costs can be so high.

Whilst we wish to support the eradication of rogue landlords and where necessary support landlords in meeting an acceptable rental standard, we do not believe Additional Licensing as proposed is in the interest of landlords or their tenants.

We will be providing landlords with guidance on how to best respond to the consultation in due course.   All landlords must play an active part in objecting to this proposal”

Rob Crawford, Chairman for the Association of Local Landlords (Wessex)

Source: Property 118

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Southampton City Council to discuss renewal of HMO scheme

CALLS are being made for a crackdown on Southampton landlords in a bid to stamp out anti-social behaviour across the city.

Housing bosses say landlords need to take a tougher stance against tenants who make life a misery for neighbours.

The calls come as residents across the city are given their say on how landlords who run houses of multiple occupancy (HMO) are licensed.

The council’s current scheme, which covers Bevois, Bargate, Portswood and Swaythling, is set to expire in July.

Council housing bosses hope to renew the current policy, which they say has been a “success”.

But they are required to consult with residents first.

Ahead of the launch of the consultation, residents and councillors are calling for the council to toughen up the scheme, in order to tackle absent landlords and unruly tenants.

Sandra Lockhead, chair of the Central Portswood Residents’ Association, said the Portswood area has been “completely changed” by the influx of HMOs.

She said: “We’ve had major problems with anti-social behaviour, noise, damage to cars and rubbish piled up in the streets.

“It’s not acceptable behaviour.”

Mrs Lockhead blamed “marauding students” and “absent landlords” for the bulk of the problems.

She said: “Normally the agencies are quite good, but some of the landlords just don’t care.”

Mrs Lockhead’s concerns have been echoed by Portswood ward member, councillor Paul O’Neill.

He said: “I’ve had reports of late night parties, fireworks being set off in the early hours of the morning.

“They leave the bins out and in some areas you can’t even walk on the pavement.”

He added: “I think the scheme is working but within a certain remit.

“I think landlords need to be accountable to the residents in neighbouring properties.

“It should be similar to pub landlords, who have a responsibility to local residents.

“If they don’t get their customers to behave they face losing their licence.”

The council’s current additional licensing scheme was launched in 2013.

All HMO properties which have three or more occupiers from two or more households must be licensed and must comply with any set conditions.

This excludes those covered by the government’s Mandatory Licensing scheme.

The council says it has handed out 3500 HMO licences since the scheme launched five years ago – half of those with set conditions.

The authority says almost 40 per cent of properties do not comply.

In a report, set to be discussed by councillors tonight, housing chiefs says their is “still work to do to raise standards”.

But it states that since the introduction of the scheme, noise nuisance and waste complaints have fallen by more than 50 per cent.

Complaints by tenants about housing conditions have also fallen by 75 per cent.

Council leader, Simon Letts, said he was pleased to see the scheme supported by a Conservative councillor.

Meanwhile, the Southern Landlords Association, which represents members across the south east, has promised to work with the council during the consultation.

However, one of its directors, Peter Littlewood, rejected calls for tougher regulations.

He said: “In general, landlords as a whole do work with tenants to control anti-social behaviour.

“But if someone continues to do it, all you can do is evict.

“It is the council and police that have the powers to deal with it.”

The city council’s cabinet are set to make a final decision on the launch of the consultation at a meeting tonight.

The cabinet will then make review the result of the consultation at a meeting in June, in the hope of implementing a new scheme before the current one expires in July.

Source: Daily Echo

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HMO planning permission for pub conversion rejected

A plan to turn the empty “The Greyhound in Sutton at Hone” north Kent pub into a house in multiple occupation has been thrown out by Dartford councillors.

An application to renovate the Greyhound in Main Street, Sutton at Hone, into an 11-bedroom HMO has been rejected following a meeting.

The developer, Bestsafe Development, wanted to replace the roof with a higher single-pitched roof increasing the height by 1.4m.

In its application, the developer said: “This proposal for the conversion of a former public house to form an HMO of 11 no. single bedrooms would be a positive addition to the local area.

“It will enable young persons to live locally, close to their families, and yet be able to commute to central London via nearby train station. It will bring much needed economy to the area and local businesses.”

An HMO is a home that has at least three tenants living there – and the scheme for the Greyhound proposed 11 single bedrooms, along with 12 parking spaces.

However, the scheme has been rejected because of how the new roof would impact on the setting of a Grade II listed building – The Hollies.

The council rejected the application on the grounds that the height of the new new roof would have significant detrimental impact to the appearance of the building.

Source: News Shopper

 

HMO finance
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Hampshire Trust Bank cuts rates for HMO & Buy-To-Let Mortgages

Hampshire Trust Bank’s commercial mortgages team has cut its remortgage buy-to-let and (HMO) 5-year fixed rate to 3.99%.

The deal is applicable to loans ranging from £200,000 to £1m, there is no application fee and it is subject to terms and conditions.

The commercial mortgages team offers bridging and term finance secured against buy-to-let, semi-commercial and commercial property with loan amounts from £100,000 to £2.5m.

Anna Lewis, head of sales, commercial mortgages, at Hampshire Trust Bank, said: “We are delighted to be launching another deal to our brokers.

“We are committed to continually improving our service and driving product enhancements wherever possible.

“We understand that this is a challenging time and want to help our brokers to make the most of opportunities in the remortgage BTL and HMO space.”

The commercial mortgages team offers bridging and term finance secured against buy-to-let, semi-commercial and commercial property with loan amounts from £100,000 to £2.5m.

Source:  Hampshire Trust Bank

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Agency prosecuted for breaking HMO and licensing regulations

A lettings agency apparently trying to get around HMO regulations has been prosecuted for licensing and housing offences.

Easy Let Agency let out properties from landlords in order to re-rent them as Houses in Multiple Occupation without the landlords’ knowledge.

Staff from the firm, which also operates under the name Focus Property Management Limited, were hit with fines in two court hearings at Willesden, north London.

In the first case, the owners of a five bedroom terrace house in Willesden, let out their property to Claudio Crisafulli who was working as a freelance estate agent for Easy Let.

Crisafulli then illegally sublet the house as an HMO behind his landlords’ backs.

Brent council’s licensing enforcement team became involved when neighbours complained about lots of people coming and going from the property. Investigating officers found it difficult to track down the people responsible because Easy Let Agency was listed under a false address.

Now Easy Let company director, Marcio Da Silva has been fined £2,000 for failure to licence and a further £2,000 for breach of management regulations as well as £1,670 in costs. Fellow director, Marcio Auriello Do Prado, was fined £3,000 for failure to licence and £3,000 for breach of management regulations alongside £1,670 fines.

Claudio Crisafulli was fined £400 for failure to licence and £400 for a breach of management regulations on top of £40 costs. The agency was also slapped with a £5,000 fine and £170 in costs. The total fines and costs for the case amounted to £19,180.

In a separate sentence hearing, Focus Property Management Limited was sentenced to a total of £20,229 in fines for management regulation and licensing breaches for another rented property in Willesden Green.

Source: Letting Agent Today

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Former Bath pub could be transformed into five-bed HMO

A former city centre pub could be given a new lease of life and turned into a five-bed house of multiple occupancy.

The Grapes in Westgate Street closed its doors for good in April 2017 with operator Green King saying it was a “difficult decision”.

The building, which dates back to 1317, was once used as a wine merchant before being converted into a pub in the 19th century.

But now the owner has submitted plans to Bath and North East Somerset Council to convert three floors of the historical building into an HMO.

According the designs and access statement on the council’s planning portal, the flats on the upper three floors were once home to staff, but have been empty for six months.

The document reads: “Since the previous tenant’s lease expired, the premises has been actively marketed without success and remains vacant.

“As there is strong demand for shared residential accommodation in secondary locations in the city centre it is proposed that refurbishment is undertaken to change the property to residential use providing five bedrooms with shared facilities.”

The proposal is seeking permission to separate the upper three floors from the ground floor and basement to create a separate property, which would be an HMO.

An HMO is a property with three or more unrelated residents.

They are popular among young professionals who may be unable to afford to live alone and university students once they leave on-campus accommodation.

At the time of writing, the application had received two objections online.

Kirsten Elliott, who lives in Bathwick, said: “I object to this proposal as it presently stands.

“Putting an HMO on such a busy street as Westgate Street seems to me to be a remarkably foolish thing to do.

“The pavement is very narrow here, as is the alleyway at the side.

“To have a shop and people coming and going from their accommodation will make traffic difficulties and could indeed be dangerous.”

H Smith, a resident of Combe Down, added: “There is also no justification as to why an HMO would be more suitable in this location than conversion to C3 residential accommodation.”

Council planning officers are expected to made a decision before March 21.

Source: Bath Chronicle